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James Hyerczyk
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The Australian and New Zealand Dollars are trading higher on Wednesday helped by a weaker U.S. Dollar and the hope of huge fiscal stimulus from the Biden administration to combat the effects of coronavirus on the economy. Meanwhile, the economic news in Australia remained mostly positive.

At 10:53 GMT, the AUD/USD is trading .7733, up 0.0035 or +0.45% and the NZD/USD is at .7137, up 0.0020 or +0.28%.

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Traders are now looking forward to the inauguration of President Joe Biden at 17:01 GMT and a speech that follows. Early Thursday, Australia will release its latest data on Employment Change and the Unemployment Rate. Early Friday, New Zealand will release its latest report on consumer inflation.

More US Fiscal Stimulus to Come

Demand for riskier currencies is being supported by a declaration from Janet Yellen, U.S. President-elect Joe Biden’s nominee for Treasury Secretary, that the government had to “act big” on coronavirus relief spending, arguing that the economic benefits far outweigh the risks of a higher debt burden.

Yellen also said that the value of the dollar should be determined by markets, a break from departing President Donald Trump’s desire for a weaker U.S. currency.

“The United States does not seek a weaker currency to gain competitive advantage and we should oppose attempts by other countries to do so,” she said.


Australian Consumer Confidence Clouded by COVID-19 in January Survey

A measure of Australian consumer sentiment slipped from a decade high in January as new outbreaks of COVID-19 in Sydney and Brisbane spooked people, though the spread has now been contained with relatively few cases and no deaths, Reuters Reported.

The Westpac-Melbourne Institute Index of Consumer Sentiment released on Wednesday fell 4.5% in January, from December, when it rose 4.1%.

The index is still 41% above a nadir hit back in April when COVID-19 lockdowns were at their height, and 14.6% up on January last year. At 107.0, the index implies optimists clearly outnumber pessimists.

“A pullback in the index was to be expected,” said Westpac’s chief economist, Bill Evans. “Since the last survey we have seen domestic border closures; the emergence of COVID clusters in some states; and the sharp upswing in COVID cases overseas, notably the U.S. and the U.K.”

Daily Forecast

A surge in debt-funded spending would be a positive for the global economy and commodity prices, while more money-printing could put pressure on the U.S. Dollar.

Commodities saw the benefit with oil prices climbing anew, while an auction of dairy, New Zealand’s biggest export earner, produced a sharp 4.8% rise in prices.

For a look at all of today’s economic events, check out our economic calendar.
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